Daily Archives: March 19, 2013

Drugs, Mad Men and Margin.

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Generic brands are killing the marketing business.  Advertisers and marketers are letting it, thanks to poor communications and poorer strategy.  I read today that 86% of all prescription drugs are generic. Como se wake up call???  If the drugs we use to help keep us healthy and alive are allowed to be generic, why aren’t we buying generic coffee, generic spaghetti sauce, generic tires?  Oh, that’s right, we are.

Price premiums are what keeps the non-generics and the cheap white label brands at bay. What differentiates the real brands?  Special formulations, special taste, great product experience and special marketing.

Back in the day, a dude by the name of Jacoby took a billion dollar payout from Ted Bates (ad agency) and advertisers took notice. (Wait for the episode on Mad Men.)  It eviscerated agency compensation and the only way to keep the business fairly strong was to hire less expensive people.  There are still rock stars in the business, but way fewer.  And the advertising business is being led around by high paid clients who get brand building but don’t get the powerful muscle memory that is comms. That’s left to agency people who are all mirror, no smoke. And it is genericizing the agency business.  

Just like premium brands, there are premium agencies.  Those are the ones being paid higher prices. Commanding higher prices. That last mile of margin is what marketers should be looking for; one’s with a  higher margin, not a lower margin. Peace!